Working Women: Participation and the Earnings GapJune 21, 2017 Over the past several decades, women have increased their participation in the labor force. They are more heavily represented in some industries in the economy, while other industries continue to work to recruit them. As women have joined the labor force in greater numbers, their wages have improved compared with those of men, but a gap remains.
Federal Reserve Chair Janet Yellen recently commented on women’s historical and current participation in the labor force. Using the lens of the history of Brown College, where she attended in the 1960s, Yellen’s critique of the stalled progress for women’s participation in the labor force is insightful and challenges us to remember there is still work to be done in opening up opportunities for women in the labor force. Yellen argues that if we want faster economic growth amid an aging population and slow productivity growth, removing barriers that limit women’s participation will improve potential economic growth and productivity.
Women in the Labor Force
In 1950, 34.0 percent of women age 16 or older in the United States were part of the labor force. The rate grew continually for almost half a century before reaching what appears to be a peak labor force participation rate for women of 60.0 percent in 1999. Since the Great Recession that began in late 2007 and ended in 2009, the decades-long growth in women’s participation has ended. While the rate remained as high as 59.5 percent in 2008, it followed the trend of a declining labor force participation rate across both sexes, and dropped to 56.8 in 2016.
Those decades did help to close the gap between the labor force participation of men and women. In 1950, men in the United States had a labor force participation rate of 86.4 percent. That rate drifted downward slowly but continuously over the decades and was 69.2 percent in 2016.
Labor force participation rates by gender in Oregon are quite similar to national rates. In Oregon in 2016, an estimated 57.8 percent of women were in the labor force, compared with 68.3 percent of men.
Women’s Work Today
Estimates from the U.S. Census Bureau’s American Community Survey for 2011-2015 show the percentage of Oregon women employed in each major industry, as well as the percentage of industry employment made up by women. Women account for an estimated 48 percent of workers in Oregon, the same share as the nation.
More women work in education and health services (35%) than in any other industry group. Many women also work in retail trade (12%), leisure and hospitality (11%), and professional and business services (10%).
As a share of industry employment, there are four industries where women are estimated to make up more than half of workers. In education and health services, 73 percent of workers are women. Financial activities employment is 56 percent female. Other services employment is 56 percent female, and in leisure and hospitality 54 percent of workers are women.
Construction has the lowest representation of women, at only 11 percent of the industry’s workforce. Natural resources and mining also has a small share of women at 22 percent of the workforce. In transportation and warehousing, 24 percent of workers are women.
Wage Disparities Persist
Pay equity has been a gender equality issue, taken up by the women’s rights movement, for decades. As women have joined the labor force in greater numbers, diversified their industry participation, and increased their education levels, pay gaps have diminished, but a gap continues to exist in the pay of female and male workers in the economy today. As the U.S. has developed into an economy heavily reliant on all adults in the family working, the broader social impact of wage inequality has begun to be realized as a detriment to entire families and communities, not just women.
Median weekly earnings of full-time female workers in the United States were $182 in 1979, compared with $292 for men. This put women’s earnings at 62.3 percent of men’s earnings. In 2016, women’s median weekly earnings were $784, and men’s were $969, putting women’s earnings at 80.9 percent of men’s earnings. From 1979 to 2016, women’s earnings increased 331 percent, while men’s earnings increased 232 percent.
Accounting for the education level of full-time female and male workers does not remove the disparity. At all levels of education, women have lower median weekly earnings than men. The earnings gap is largest for workers with bachelor’s and advanced degrees – among workers with this level of higher education, women make 74 percent of what men make.
For workers with bachelor’s degrees, women’s weekly earnings are $994, while men with bachelor’s degrees make a weekly average of $1,348. Looking at a 52-week work year, that difference amounts to an additional $18,400 in annual pay for men with bachelor’s degrees compared with women at the same education level. Among advanced degree holders, women’s weekly earnings are $1,257 and men’s are $1,707, meaning an additional $23,400 in annual earnings – on average – for men compared with women who have advanced degrees.
In all major industries, women earned less than men. Among full-time, year-round workers, the gap was the smallest in transportation, warehousing and utilities, where women made 95 percent of men’s earnings. Women in leisure and hospitality earned 90 percent of men’s earnings. The earnings gap was largest in public administration, where women’s average annual earnings were 72 percent of men’s. Women’s earnings in financial activities, and educational and health services amounted to 74 percent of men’s earnings.
Is this persistent wage gap an example of gender bias? A remnant of the good old boys club? Or is it a matter of economics and personal choice? It is probably a combination of discrimination, social norms, and personal choice that perpetuates the wage gap. One argument, articulated by Hunter College psychology and linguistics professor Virginia Valian, says that the wage gap is a result of “gender schemas” in the workforce, implicit assumptions about gender differences – held by everyone – that create small differences in characteristics, behaviors, perceptions and evaluations of men and women, causing men to be constantly overrated in their professional lives, and women to be underrated.
Another argument is the glass ceiling; women seem to have more difficulty reaching the top ranks of any industry than do men, evidenced by the still-small ranks of female CEO’s at major companies. In early 2017, only 32 Fortune 500 companies had female CEOs – the highest number ever among this group of elite companies. In 2016 (the most recent analysis available), just 54 Fortune 1000 CEOs were women. This argument is supported by the larger earnings gap among workers with the highest education levels, where men seem to see far larger returns for their advanced education than is the case for women.
Then there is the argument of choice, and its interplay with family care responsibilities that still tend to fall more heavily on the shoulders of women. Women work part-time more often than men (29% and 15%, respectively). While this doesn’t affect median weekly earnings, which included only full-time year-round workers, it could affect the likelihood of promotions and the perceptions of future employers, thus affecting the wages of women who return to work full-time. Women also tend to take more breaks from employment during their careers, more frequently leaving the labor force to care for children and family responsibilities.
The argument has also been made that women are not drawn to the type of work that can come with high-risk premiums, including certain types of construction and protective service occupations. Less than one-half of 1 percent of women are in construction compared with 9 percent of men, and 1 percent of women are in protective service, while 3 percent of men are. Women are more heavily represented in office and administrative support occupations (20% of women and 7% of men), which tend to have lower wages. Female mentors in fields that still lack full representation of women has been cited as a strategy for encouraging women to consider fields that have traditionally been dominated by men.
Women’s participation in the labor force stabilized in the first part of this decade. Their labor force participation rate rose from 34.0 percent in 1950 to 56.8 percent in 2016, converging with men’s participation rate, which dropped from 86.4 percent in 1950 to 69.2 percent in 2016. Women have seen larger gains in their median weekly earnings over time, for full-time year-round workers, with women’s earnings increasing 331 percent from 1979 to 2016, and men’s increasing 232 percent. However, even with improvement over time, and regardless of the causes of the earnings gap, such a gap persists today.